Did mandatory COOL have a positive or negative effect on
feedyard profits?

Nevil Speer, BEEF Magazine

Oct 02, 2019

During the past several weeks, this column has addressed
potential inclusion of mandatory country of origin labeling (MCOOL) as part of
the new USMCA (U.S., Mexico, Canada) trade agreement (often referenced as NAFTA
2.0). Those columns have focused on 1: meat demand, and 2: feeder cattle prices
in the U.S. vs. Canada in reference to MCOOL, respectively.

However, interest in COOL has seemingly ramped up even
more in recent weeks following the fire in Tyson’s Holcomb, KS beef plant. The
#FairCattleMarkets campaign on Twitter is largely in response to the widening
live-to-cutout spread since the fire. And as part of that campaign, COOL has been
repeatedly referenced as an item that’s important to the beef industry’s
profitability

To that end, this week’s graph provides a look at annual
feedyard profitability since 2000. Annual averages are provided in the
illustration for the following years:

·2000 to 2008

·2009 to 2015 (MCOOL years)

·2016 to 2018

Profitability averages are $-27, $-15, and $+22 per head,
for the three periods outlined, respectively.

In other words, the best period of profitability at the
feedyard level has occurred since MCOOL was repealed (2016 to 2018). And
without 2014’s huge boost for profitability, the average return for cattle
feeders while MCOOL was in effect would have been $-64 per head—far and away
the worst of the three periods.

That brings us back to the #FairCattleMarkets campaign.
There’s seemingly some confounding of topics with respect to the live to cutout
spread, profit, and COOL. In summary, based on the data, at best it would seem
COOL was NOT an influential factor in driving feedyard profitability.

Therefore, there were no extra dollars derived from COOL
to make their way back upstream; COOL didn’t contribute to the favorable
margins cow-calf operators experienced in ’13, ’14, and ’15.